North Carolina’s Research Triangle Tops Our 2018 List Of The Best Places To Rent

Real Estate
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Raleigh, North Carolina, USA downtown city skyline.Shutterstock

Home to UNC Chapel Hill, N.C. State and Duke University, North Carolina’s Research Triangle region—including the cities of Raleigh, Durham and Chapel Hill—is best known for top notch universities, but students would be wise to consider sticking around after graduation. Reasonably priced apartments, coupled with strong population growth and ample employment opportunities, earn the area the top spot on our 2018 list of the best places to be a renter this year.

Overall, cities on this list fall into two broad buckets, explains John Chang head of research for Marcus & Millichap, the commercial brokerage which provides data and insights for our annual ranking. On one end of the spectrum are the slow and steady markets. Places like no. 5 Louisville, Ky. Or no. 7 St. Louis, which tend to be affordable with plenty of inventory to choose from and room to grow. In these places, however, economic growth is modest. Huge waves of people aren't moving in and demanding places to live, instead a stable population of locals tend to own homes.

Meanwhile, in cities like no. 3 Austin, Texas or no. 6 Nashville, Tenn employment and population are growing and, luckily for newcomers, construction is keeping up with the demand. Between 2013 and 2017, 26,000 rental apartment units have been added in Nashville—a 22% increase in inventory. In Austin, 42,427 units came online for a 22.2% increase.

In no. 1 Raleigh-Durham 5,700 apartment units were added last year and 25,000 apartments in the last five for an inventory increase of 18%. This growth is necessary to keep up with 11.3% population growth over the same time period. Meanwhile about 140,000 jobs, many of them in tech, have been created in the region since 2012—an 18% increase.

This is in stark contrast to places like Los Angeles, San Francisco and New York, where lack of land to build and tough zoning laws keep the rate of unit growth in the single-digits. These cities, no coincidentally, rank high on our companion list of the worst for renters.

The List.

Durham, North Carolina.Shutterstock

1. Raleigh-Durham-Chapel Hill, N.C.

Average monthly rent: $1,054

2017 rent growth: 2.1%

Vacancy: 5.5%

Rental share of median household income: 18.2%

Five-year population growth: 11.3%

2017 job growth: 2.1%

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2. San Antonio

Monthly rent: $934

Rent growth: 2.4%

Vacancy: 7.4%

Rental share of income: 19.3%

Population growth: 10.1%

Job growth: 3.2%

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3. Austin, Texas

Monthly rent: $1,200

Rent growth: 1.9%

Vacancy: 5.9%

Rental share of income: 19.5%

Population growth: 15.1%

Job growth: 2.7%

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4. Indianapolis

Monthly rent: $837

Rent growth: 5.2%

Vacancy: 6.3%

Rental share of income: 16.7%

Population growth: 5.0%

Job growth: 1.7%

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5. Louisville, Ky.

Monthly rent: $833

Rent growth: 2.3%

Vacancy: 5.7%

Rental share of income: 17.5%

Population growth: 2.9%

Job growth: 1.5%

6. Nashville, Tenn.

Monthly rent: $1,116

Rent growth: 1.7%

Vacancy: 5.1%

Rental share of income: 21.0%

Population growth: 10.7%

Job growth: 1.8%

7. St. Louis

Monthly rent: $880

Rent growth: 2.3%

Vacancy: 6.9%

Rental share of income: 16.7%

Population growth: 0.6%

Job growth: 0.7%

8. Charlotte, N.C.

Monthly rent: $1,046

Rent growth: 3.8%

Vacancy: 5.2%

Rental share of income: 20.1%

Population growth: 10.2%

Job growth: 1.5%

9. Dallas-Fort Worth

Monthly rent: $1,091

Rent growth: 4.0%

Vacancy: 5.6%

Rental share of income: 19.7%

Population growth: 10.0%

Job growth: 2.2%

10. Phoenix

Monthly rent: $991

Rent growth: 6.6%

Vacancy: 5.6%

Rental share of income: 19.2%

Population growth: 9.5%

Job growth: 1.9%

11. Kansas City, Mo.

Monthly rent: $918

Rent growth: 2.9%

Vacancy: 5.5%

Rental share of income: 17.1%

Population growth: 4.0%

Job growth: 0.9%

12. Houston

Monthly rent: $1,080

Rent growth: 7.2%

Vacancy: 6.2%

Rental share of income: 20.5%

Population growth: 11.3%

Job growth: 1.5%

13. Columbus, Ohio

Monthly rent: $899

Rent growth: 5.4%

Vacancy: 4.3%

Rental share of income: 16.9%

Population growth: 6.4%

Job growth: 1.4%

14. Las Vegas

Monthly rent: $955

Rent growth: 7.2%

Vacancy: 5.5%

Rental share of income: 20.1%

Population growth: 11.1%

Job growth: 3.1%

15. Salt Lake City

Monthly rent: $1,075

Rent growth: 5.1%

Vacancy: 4.5%

Rental share of income: 17.6%

Population growth: 8.6%

Job growth: 2.1%

Behind The Numbers

The aim of Forbes’ annual list of the best places to rent is to provide a snapshot of the financial reality of being a renter in each market. Louisville’s $833 average monthly rent is sure to be appealing, but that doesn’t necessarily mean it’s in your interest to pack up and move your life there.

Marcus & Millichap provided the data for the list, as well as for the companion list of the worst cities for renters. The commercial brokerage and research firm tracks 46 large markets where they see investor interest. While investors use data like this to determine where they want to build or buy apartments, it can also provide renters with clues on where they can afford to live and whether their rent might be rising soon.

For each of those cities they compiled key stats that went into our tally:

Average monthly apartment rent in Q4 2017, net any concessions such as a month free or waved parking fees. Lower rent boosts a city’s position on this list.

Change in apartment rent from Q4 2016 to Q4 2017. No one enjoys a big rent increase, so places with modest rent growth tend to perform well on this list. However, affordability can often outweigh a big year-over-year change, as was the case in Phoenix this year.

Average apartment vacancy rate. For landlords a vacant apartment means lost income. So when vacancy is high they will fight harder to keep the tenants they’ve got and will make more concessions to get new tenants in the door. In the long run, however, high vacancy can means less investment in improvements and new supply--so be careful.

Average apartment rent as share of median household income, which we use to measure affordability, is double weighted in our ranking. What may seem like a reasonable rent on a high salary can be impossible on a lower one. So this tells us what most people in a given place can afford. Personal finance pros tend to recommend spending no more than a third of your income on rent--and preferably less.

In an effort to make this list reflect renter’s experiences more accurately, this year we added five year population growth to measure a city’s desirability and one year job growth to reflect its economic prospects. Slow growth hurts a cities standing on this list.

I am a staff writer covering real estate. Come for the outrageous homes, stay for the insights on what gets built and why. Previously I wrote about the future of money: fintech, Millennials and the economy at large, as well as news from the markets.
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